GM appeals to Supreme Court to block further ignition suits

The company claims that the bankruptcy laws protect it from its predecessor's errors

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All else having failed, General Motors is appealing to a higher power to shield it from further litigation over its faulty ignition switches that have been linked to at least 124 deaths and 275 injuries.

The higher power, in this case, is the U.S. Supreme Court. GM is asking the court to overturn an appeals court finding that "Old GM's" 2009 bankruptcy filing does not shield "New GM" from additional lawsuits. The company faces a likely avalanche of suits from individuals if the high court turns aside its appeal.

GM recalled 2.6 million vehicles, mostly small sedans, because of the defect, which could cause the engine to suddenly shut down, leaving drivers fighting to control cars minus the ignition as well as power streering and brakes. It has already paid about $2 billion in civil and criminal penalties and settlements.

The pending lawsuits are on behalf of individuals who were injured or killed as well as those who claim their cars have lost value because of the defective ignitions.

Right to due process

In July 2016, the 2nd U.S. Circuit Court of Appeals in New York held that consumers would be denied their constitutional right to due process if they were not allowed to sue. The plaintiffs argue that GM knew of the defect prior to the bankruptcy filing but did not disclose it publicly and therefore they should not be blocked from going forward with their suits.

In its petition to the Supreme Court, GM says that bankruptcy is intended to permit a newly formed company to take over the assets of a failing company while remaining "free and clear" of its liabilities.

It says the 2nd Circuit's decision was "exceptionally wrong."

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